10 11 1. Compute the cost of a preferred stock paying a 5% dividend on a $50 par value. If a new issue is offered, flotation costs will be 10% of the current price of $90. 12 Par value 13 Dividend rate 14 D 15 Market price 16 Flotation rate 17 Flotation cost 18 Net proceeds 19 kps = 20

1. Compute the cost of a preferred stock paying a 5% dividend on a $50 par value. If a new issue is offered, flotation cests will be 10% of the current price of $90